Betfred appears to be the frontrunner candidate to purchase Phumelela after the UK-based gambling company offered to pay between ZAR875 million (£39.6 m) and ZAR925 million (£41.9m) for the assets of the struggling South African horse racing operator. The offer from Betfred, which have acquired in March the UK client database of MoPlay due to financial woes for its parent company Addison Global, comes as an alternative to the one from Mary Oppenheimer Daughters (MOD), a company owned by the family of Harry Oppenheimer.
Phumelela is looking to sell its business as it was severely affected by the crisis induced by the coronavirus global outbreak during times when the operator was already lagging performance-wise. The company set up a business rescue plan after falling in dire financial conditions and asked for bankruptcy protection.
Betfred Looking to Enter the South African Market
Betfred’s offer consists of an initial amount, ZAR875 million, and a conditional deferred one, ZAR50 million, and has an expiration date, September 1, when the creditors of Phumelela would have an online meeting through Zoom to discuss both offers. Betfred preserved the right to extend its offer, though, according which all creditors will be paid in full. Under MOD’s proposition some creditors will get only 72% of their money.
“In the face of a challenging global and domestic economic environment, the offer represents a vote of confidence in the South African economy and a direct response to President Ramaphosa’s drive to boost the South African economy by securing USD$100 billion in foreign investment by 2023.”Official statement, Betfred
As of August 25, the day of the offer, Betfred has encumbered 20 million shares of William Hill worth around ZAR714 million as security for the deal. Besides the payment of up to ZAR925 million, the UK-based company will provide a ZAR650 million loan to Phumelela, to help it pay its debts.
Betfred Offers Better Loan Repayment Terms
MOD intends to pay Phumelela’s creditors in three tranches with the last one being more than a year after Betfred’s second and last tranche, November 15, 2020, and Betfred also promised to protect all business and jobs, besides keeping all of Phumelela’s assets together.
“…the investment by an experienced multinational corporation into South Africa is likely to result in enhanced growth and opportunities for South Africa, as well as the transfer of skills and knowledge to local employees. This investment should not only be beneficial to Phumelela’s creditors and other stakeholders but also to horseracing and betting and South African society in general.”Official statement, Betfred
According to Betfred’s offer, Phumelela’s horse racing assets are valued at ZAR325 million, the company’s joint venture with Gold Circle, Phumelela Gold International, and Betting World business are valued at ZAR330 million and ZAR220 million, respectively.
Betfred pointed out its interest in the acquisition of the South African operator was expressed in three previous offers, with the latest one believed to be addressing all concerns raised from the previous ones.